A housing shortfall, record home costs and cuts to subsidies are intensifying the US affordability crunch.
Of the various dimensions of the affordability crisis weighing on US families, housing probably weighs heaviest.
The typical home price has risen above five times the annual income of the typical family. The monthly cost of owning a home has hit record highs.
The US faces a housing shortfall of millions of homes. But builders are not rushing to meet the shortfall.
The supply of new homes declined over 14% in May, compared to May of 2025.
Moody’s Analytics expects single-family and multifamily residential investment to contract every year between now and 2030.
Congressional Action Stalled
Congress stepped up to the challenge in a bipartisan move.
For the first time in 30 years, it passed legislation that would accelerate homebuilding, relaxing environmental reviews and other federal regulations that stymie housing development.
Then, Donald Trump said no.
He wouldn’t sign the legislation until Congress passed a bill to limit mail-in voting and require voters to submit proof of citizenship.
The housing legislation is, by comparison, “of minor importance”, he said.
Broader Economic Pressures
Almost two years into the second Trump administration, it is evident that the president’s abiding objective has been to empower and enrich himself and his offspring.
It is nonetheless surprising how every one of Trump’s policy initiatives has sabotaged some core constituency.
Launching a war against Iran before figuring out its objectives or how it might unfold probably takes the cake.
The surge in gas prices following Iran’s decision to close the Strait of Hormuz dismantled one of the key claims that gave Trump the presidency: that he would slay inflation.
Rising inflation means that real wages are now, on average, declining.
Moody’s Mark Zandi estimates that by June the rising cost of energy had eaten up the higher refunds taxpayers got from Trump’s One Big Beautiful Bill Act of 2025.
The accelerated reduction of subsidies for solar power development in his One Big Beautiful Bill, added to his efforts to stop investment in wind farms, are driving up the prices of renewable energy, even as demand for power from AI datacenters soars.
In case higher gas and power prices aren’t enough, Trump has also raised healthcare costs.
Enrollment in health insurance policies under the Affordable Care Act could decline by five to six million this year, due to the abrupt ending of government subsidies that led to a 58% increase in premiums, on average.
Trump’s broad punitive policies also include cuts to food assistance and health insurance for the poor under Medicaid, complemented with specific swipes against narrower constituencies.
Take farmers, among Trump’s most loyal supporters. In 2024, he won 433 of the nation’s 444 farming-dependent counties.
Still, his trade war against China contributed to a $17bn decline in exports to their main Asian market last year, while his hostility towards Canada led to a $1bn decline in farm exports to the US’s northern neighbor.
The White House tried to make up for part of this, distributing $12bn last December to farmers who suffered what it called “unfair market disruptions”.
But Trump keeps adding burdens: the closure of the Strait of Hormuz has drastically raised the cost of fertilizer.
Meanwhile, repeated immigration raids have targeted the farm workforce.
The administration’s war against immigrants is weighing broadly on the labor force.
Trump’s crackdown has not only hit immigrant labor, it also reduced employment of Native men, who often take complementary jobs.
Trump’s trade war is having similar effects across his male-heavy blue-collar base. It’s too soon to estimate the specific impacts of his most recent rounds of tariffs.
But his claim that levies on industrial imports would boost domestic employment is in some tension with the decline in manufacturing jobs since he took office.
Studies find that the protectionism of his first administration invariably led to fewer manufacturing jobs.
That’s because tariffs raised the price domestic manufacturers paid for industrial inputs and machinery, eroding their competitiveness. Moreover, retaliation by other countries closed foreign markets to American-made stuff.
Male employment has fallen by more than 1.5 million since Trump came to office, while female employment has risen by nearly half a million.
Trump’s followers are right to be nervous.
If anything, his poor policy record has intensified his ambition to leave a mark. His next possible victim may be those that rely on North American trade.
Nine of the 10 states that most depend on exports to Mexico and Canada voted for Trump in 2024.
If Trump follows through on his threat not to renew the trade pact with these two countries, any retaliatory tariffs against US products would fall disproportionately on his supporters.
